The burning question now is this: Does slashing a felon's half-million-dollar public pension violate the U.S. Constitution?

Bruce Malkenhorst – retired administrator for the tiny city of Vernon, who pleaded guilty to misappropriating public funds in 2011, and who received pension checks totaling a rather stunning $541,000 in 2012 – says yes.

On Friday, Malkenhorst opened a new front in his knock-down, drag-out war to prevent his retirement check from shriveling to $115,000 a year. He sued the state of California and the city of Vernon in federal court, arguing that a new law to protect Vernon from having to make up the vast difference between those two numbers is unconstitutional, “because it seeks to interfere with the vested property rights of a United States citizen, who pled guilty to a felony charge, even though the property that the government seeks to seize is property unrelated to the facts underlying the felony.”

Malkenhorst, who lives in Huntington Beach, was earning $529,536 as Vernon's city administrator, finance director, redevelopment director, city clerk, city treasurer, and head of the municipal light and power operation by the time he retired in 2005. He quickly became the top-paid public pensioner in the entire Golden State, and, perhaps, anywhere.

The checks continued even after he pleaded guilty in 2011 to misappropriating $60,000 in public funds and using it for political contributions and personal expenses such as golf games, massages, a personal trainer and a home security system.

It just so happens that the scandal in Bell – where city officials were paying themselves obscene salaries and lying about it – made officials everywhere a bit sensitive. And soon the giant California Public Employees' Retirement System was casting a more skeptical eye at those on its rolls.

CalPERS launched a review of Malkenhorst's retirement allowance in 2012, noting that while Vernon reported his monthly pay rate at $44,128, CalPERS itself could only find $9,654 per month that fit its legal definitions. And so CalPERS said his pension would be slashed by some $400,000 a year, down to the aforementioned $115,000, which Malkenhorst dubbed “elder abuse” in a chat with our colleague Tony Saavedra.

Malkenhorst filed suit against CalPERS in both Orange County and Los Angeles County superior courts, making various legal arguments, including that CalPERS has no power to take this sort of action because Vernon is a charter city, and that CalPERS had already reviewed and approved his pension and couldn't change its mind so many years later.

Malkenhorst lost in both courts, and both cases are on appeal.

As a bit of insurance, the Legislature passed “Malkenhorst's Law” in September, which was praised by Vernon officials for prohibiting “convicted former public officials from filing lawsuits claiming that cities are financially responsible for payment of any CalPERS reductions in their pensions that stem from their wrongdoing as public officials.”

Vernon has invoked this new law during the appeal process in state courts – leading to Malkenhorst's challenge now in federal court.

“Vernon remains responsible to pay Malkenhorst the full pension that Vernon promised,” his federal suit states. “CalPERS is not a party to the contract between Malkenhorst and Vernon. CalPERS does not have the power or right to amend the Vernon-Malkenhorst contract retroactively. Vernon's choice of CalPERS as the pension administrator does not allow Vernon to break pension promises that it made.”

The city certainly disagrees.

“We ought not even be party to this,” said spokesman Fred MacFarlane. “If Mr. Malkenhorst has any beef, it's with CalPERS. CalPERS made a ruling that his pension ought to not be what it was, and should be adjusted. The city is in agreement. When that decision ultimately gets enforced, the city will recoup the money it has paid to support that pension allowance. We are looking forward to CalPERS being successful.”

CalPERS, for is part, is standing by as the cases wend their way through appeals. Oral arguments are due in state court this month on one case, and the other is being briefed, said spokeswoman Amy Morgan.

“While pension amounts are, as Malkenhorst alleges, constitutionally protected, that is under a presumption that they are legally set in the first place. If they were illegally set, then they can, and should, be reduced.”

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